The ergodicity problem in economics | Nature Physics

This Perspective argues that ergodicity — a foundational concept in equilibrium statistical physics — is wrongly assumed in much of the quantitative economics literature. By asking the extent to which dynamical problems can be replaced by probabilistic ones, many economics puzzles are resolved in a natural and empirically testable fashion.

Subjects Applied mathematics Statistical physics, thermodynamics and nonlinear dynamics Matters Arising to this article was published on 02 December 2020 An Author Correction to this article was published on 06 December 2019 This article has been updated Abstract The ergodic hypothesis is a key analytical device of equilibrium statistical mechanics. It underlies the assumption that the time average and the expectation value of an observable are the same. Where it is valid, dynamical descriptions can often be replaced with much simpler probabilistic ones — time is essentially eliminated from th

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